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14422Evernote CEO Phil Libin on Turning Loyal Users Into Paying Customershttp://allthingsd.com/20131226/evernote-ceo-phil-libin-on-turning-loyal-users-into-paying-customers/
http://allthingsd.com/20131226/evernote-ceo-phil-libin-on-turning-loyal-users-into-paying-customers/#commentsThu, 26 Dec 2013 17:25:37 +0000http://allthingsd.com/?p=381055Chances are that if you’re an Evernote user, if given the chance to sit down with its founder and CEO Phil Libin, you’d want to take the opportunity to do a deep dive on the company and its product. That’s just how Evernote users are.

And that’s exactly what I did last month. We met while he was on a visit to New York, and ended up talking for more than 90 minutes about a wide range of things. Among them: Evernote’s intriguing move into selling physical products, Libin’s vision for building Evernote as a “Nike for the Mind” and who Evernote users are, demographically speaking. I published Part One of the conversation earlier this month. Below is the second and final part.

In this portion we talked a bit about what has been described as a “cult-like” feeling among Evernote users and where it springs from. Libin also talked about what he’s learned from a security breach that hit the company earlier this year, why he thinks “a good problem to have” is actually worse than a bad problem and future plans for a new data center and an initial public offering.

AllThingsD: This is the year during which being an Evernote user was compared by a business magazine to being in a cult. It was a tongue-in-cheek reference, but at the same time, as a user of the product, I understand the feeling. There’s this sense in using Evernote that you never quite master it. I know it can make me productive, and yet there’s no way I’m using it to its fullest potential. But I never feel like I get there. I guess I’m not the only one who feels this way?

Libin: No you’re not. And part of that feeling is on us in that we need to make the product better. But part of it is also the point. I had this interesting epiphany over the years, and it became even clearer as we got into Evernote Business. … The idea with Evernote is that there is this gap. What you want changes months to month, and then there’s what Evernote gives you. And what Evernote gives you is like 90 or 95 percent, but then you have to put in that last five percent to make it do what you want. A little bit of that friction is useful, but it makes the whole thing more flexible. You start a new project or you change jobs or you change devices, you can bring everything in Evernote along with you. Whereas if it was this perfect tailored fit for where you are in life, it would be really brittle. Also that little bit of work tends to make people more loyal. They’ve invested some effort and work into it, and so that feeling that it’s never quite perfect and that you’re always tinkering with it is sort of a desirable feeling. … That little bit of friction is probably costing us about half, if not two thirds, of our potential user base. We spend a lot of time thinking about the right balance of friction.

So about how many users do you have now? And how readily are you making money off the users you have?

We have about 80 million users globally, and that’s a combined number for free and paid. Our conversion rate increases linearly with cohort age, so the longer you use Evernote, the more likely you are to convert to premium. The idea is that we want you to use Evernote forever. Once you’re using it, we want you to keep using it, and it’s more important that you stay than you pay us. We want the engagement. The longer you use it, the higher the perceived value gets. And the higher the perceived value, the more willing you’re willing to pay. It’s up to us to make something that you want to pay for. The percentage of people who pay in the first month is like one half of one percent. But if they use it for a year, that goes up to seven percent. In the second year, it goes up to 11 percent. Our oldest cohort, the people who have been with us five years or so, it goes up to 25 percent.

And you make most of your money from premium users?

We have one business model, which is to sell direct. And then up until about 11 months ago, we had only one revenue stream, the freemium model where you convert from free to premium. Now we have Evernote Business, which companies pay for, and we’ve seen great growth in that in less than a year. And then we launched the Marketplace with physical products, and it has barely been two months and it’s already exceeded our expectations a lot.

So where are you in the IPO process? Will you consider going public in 2014? You’ve raised so much money that I’ve lost track, which is a good problem to have …

It’s funny you say that because in all seriousness, if I ever write a book about the whole Evernote experience, the title would be “A Good Problem to Have.” The reason is that good problems actually suck worse than bad problems. They are harder to deal with and more stressful. For example we once thought it would be a good problem to have that the company would be growing so fast that we would outgrow our data center. Since then we’ve had to deal with it. But to get to your original question, we’ve raisef about $250 million in five rounds and there will be more. I think we might start thinking about an IPO in two to three years. But no, we’re not ready to go public in 2014. I want Evernote to be a company that deserves to be a great public company. And we’re not at this point. Not yet.

So let’s talk about your other good problem to have. What is the state of your infrastructure? You said you grew out of one data center. What are you doing about that?

We are now running in one big data center in California. We have a backup data center that is geographically far away for disaster recovery, and we’re setting that up now. We have two data centers in China for the Chinese version of the service. We lease dedicated space and we build our own servers. This is probably the last time we will do that. Our next move in the U.S. will probably be to build our own data center. It will come down to the headcount issue. How many full time people are you going to pay to be there. Our next big move in the U.S. will be maybe in 18 months, and it will be our own physical building. We’re starting to figure it out now.

What have you learned since your security breach?

A ton. The short answer is that we had a plan that we were going to follow. So when it happened, there weren’t that many decisions to make. I’m glad that we made that plan because the decisions were very painful. The time that you want to be making these decisions is not when you’re reacting to the situation. We knew ahead of time that if there was any chance that passwords were compromised, we would do a full reset. We knew it would be expensive, because all Evernote usage stops right there until the user resets. We did it because the real potential for damage to the company was to our reputation. As it turned out there was no data that was accessed. They got encrypted passwords, which are salted and hashed. We’re still cooperating with an investigation. We think we know who it was that did it. It wasn’t state-sponsored, and it wasn’t targeted at any Evernote data. It was broadly aimed at trying to get people’s credentials that could be used to transfer money. It was a textbook identity-theft ring.

Did you lose any users?

We lost a lot of users. I would estimate in terms of forward progress, maybe three or four months. It took us about that long to get to where we were before. It also cost us revenue, because we had a lot of revenue-generating features that we had intended to roll out, and we had to put them on hold because all we did was deal with the security incident. It set back everything. Two-factor authentication was a feature I was going to announce at Le Web, so two-factor got moved up by nine months. But a lot of other stuff got pushed back. So it cost us a lot in terms of forward progress. But we’re a stronger company because of it. We have a strong in-house security team that we hired from Zynga. And we’ve been working with IPSec and Mandiant on the initial response and audit. So we’re spending a lot more money on security than we did before. We’ve put in new processes around security, things that as a startup you don’t do. We got more mature a lot faster than I think we otherwise would have.

Zach Nelson, the company’s chief executive, said Wednesday that prospective customers in Europe have grown more concerned about whether the U.S. government could access proprietary information stored in data centers around the world. “There’s now a higher level of concern about keeping data in Europe,” he said.

]]>http://allthingsd.com/20131219/netsuite-speeds-data-center-rollout-amid-nsa-spying/feed/0What's Next for GPU Chips? Maybe the Network.http://allthingsd.com/20131122/whats-next-for-gpu-chips-maybe-the-network/
http://allthingsd.com/20131122/whats-next-for-gpu-chips-maybe-the-network/#commentsFri, 22 Nov 2013 16:15:44 +0000http://allthingsd.com/?p=374489Over the last few years it has been interesting to see where in the computing landscape graphics processors like those turned out by Nvidia have shown up.

Remember that GPU chips were designed and intended initially to enhance the experience of computer games by bringing some added computing muscle. And for years the primary place you’d find them is in PCs either built in or sold as an add-on card for gaming enthusiasts.

Since then GPUs have gone on to become a significant force in some of the more high-end fields of computing work: They’re critical in animation and special-effects studios, oil and gas exploration, and as the release of the latest Top 500 list earlier this week showed, supercomputing.

What’s next for the GPU to infiltrate? A presentation at this week’s SC13 conference on supercomputing in Denver by Wenji Wu, a researcher at Fermilab, the U.S. Department of Energy Research Lab near Chicago, suggests it may be networking.

In a two-page abstract of a paper (the full paper is here), Wu argues that GPU chips might be put to good use in the field of network monitoring. Tracking the second-by-second performance of a network in a data center is a difficult computing problem. You need to monitor what’s going on, live, and that requires a lot of computing power. You have to look for individual packets that meet a particular set of rules, grab them and analyze them on the fly as fast as you can find them.

Usually the job is done by specialized chips called Application Specific Integrated Circuits that are programmed to do a specific task. The problem there is that ASICs are hard to reprogram if the task changes. They’re also expensive to replace.

General-purpose CPU chips, like an x86 processor from Intel or Advanced Micro Devices, could do the job because they’re flexible, but Wu suggests that they’re not a good fit because they’re not fast enough.

Wu and his team have been experimenting with using Nvidia GPUs to do the work and found that when compared to CPU chips, a GPU is faster at network-monitoring tasks. Versus a single-core CPU, the GPU was anywhere from about nine to 17 times faster, Wu found. A six-core CPU did better, but even then the GPU was 1.5 times to more than three times faster. The next step, he writes, will be to add some security analysis features.

Obviously Wu’s demonstration is just a prototype. Certainly, it’s a long way from commercial implementation. But it’s an interesting read that suggests a new direction for GPU chips in the years to come. They’re not just for gaming anymore.

]]>http://allthingsd.com/20131122/whats-next-for-gpu-chips-maybe-the-network/feed/0How Reliable Will Facebook's Windy New Iowa Home Be?http://allthingsd.com/20131114/how-reliable-will-facebooks-windy-new-iowa-home-be/
http://allthingsd.com/20131114/how-reliable-will-facebooks-windy-new-iowa-home-be/#commentsThu, 14 Nov 2013 21:31:15 +0000http://allthingsd.com/?p=372843If you were looking for the latest indication in the changing ways that large data centers are being designed and powered, yesterday’s announcement from Facebook that it will use 100 percent wind power at its Altoona, Iowa, facility was a pretty good one.

In a corporate blog post yesterday, the social networking giant said the facility will, when completed, draw from an Iowa electrical grid enhanced by a wind farm that it said will add as much as 138 megawatts of new power.

And that sounds good — in theory. But will it be reliable power? Clean and environment-friendly as it seems, wind isn’t as predictable as, say, a steady supply of coal. Some days, indeed some hours, are windier than others. So how to think about this variability factor?

I did a little checking. First off, looking at 52 years worth of average wind speed data through the year 2001 for nearby Des Moines shows that, on an annual basis, the new wind farm can expect winds at any given time of the year of about 11 miles per hour. The area is located in the zone that the U.S. Government’s National Renewable Energy Laboratory rates as “fair” for wind power generally, but that’s better than a large portion of the country where the average wind speed is much lower. (See map.)

Second, the trick to dealing with the simple variability in wind is to build lots of wind farms over a wide area. In practice, there’s an 80 percent chance that a group of turbines in a small area will see their output change up or down by 10 percent within an hour. But it gets less severe when you scale out to five hours: There’s a 40 percent chance that you’ll see a shift of plus or minus 10 percent over five hours.

In order to deal with that variability, you need to distribute your turbines widely. Do that and those wild variations begin to smooth out and don’t swing quite so much. If one turbine is sitting still, another a few miles away may be spinning like a top.

And it turns out that Iowa is one of the better markets in the country to use wind-generated power. The state has a goal of building up 10,000 megawatts of capacity by the year 2020, and will probably exceed that by 2017. According to the Iowa Wind Energy Association, a trade group, the state already has 3,198 turbines in operation at 100 different sites.

And as of 2011, Iowa already led the U.S. in terms of the amount of wind power generated per kilometer: Nearly 30 megawatts, much higher than Illinois (home to the “Windy City” of Chicago), which generated less than 20. Clearly, Iowa has figured this wind power thing out better than most states, which probably has a lot to do with what attracted Facebook to the area in the first place. Microsoft and Google are already fans of the Hawkeye state themselves.

]]>http://allthingsd.com/20131114/how-reliable-will-facebooks-windy-new-iowa-home-be/feed/0Cisco Warns That 2014 Is Going to Be a Tough Yearhttp://allthingsd.com/20131113/cisco-warns-that-2014-is-going-to-be-a-tough-year/
http://allthingsd.com/20131113/cisco-warns-that-2014-is-going-to-be-a-tough-year/#commentsThu, 14 Nov 2013 00:32:08 +0000http://allthingsd.com/?p=372587Shares of Cisco Systems fell by more than 10 percent in after-hours trading after the company gave guidance for the coming quarter that fell considerably short of what analysts had expected.

Earlier today, Cisco reported sales for the October quarter that missed expectations, and blamed the weakness on declining sales in its emerging markets. During a conference call, Cisco said it expects to earn between 45 cents and 47 cents in its second quarter versus the 52 cents that had been expected. For the year, it expects to earn between $1.95 and $2.05 a share, a lot lower than the $2.10 analysts had been modeling.

The disclosure took analysts listening to a conference call with CEO John Chambers and other Cisco executives by surprise. One went so far as to describe himself as “floored.”

I just got off the phone with CEO John Chambers, and I asked him what is it that’s hammering Cisco’s expectations so seriously.

“The things that we control and influence are going well,” he said. It’s those pesky economic forces that are causing so much trouble. The big one was business in emerging markets: It has fallen off a cliff, from 13 percent growth two quarters ago to a 12 percent decline in the quarter ended in October. Emerging markets amount to more than 22 percent of sales, so its easy to see how that can hurt the overall sales picture. Another segment, sales to service providers, fell 13 percent in the quarter.

A product transition in Cisco’s high-end routing business is also under way, he said. Some customers are holding back on buying the newer gear, and holding on to their older stuff. “All it takes is about 10 percent of those customers hesitating and that impacts you in a major way,” he said. It’s a situation that should correct itself later in 2014 when those customers get a chance to test out the new products. But Chambers conceded that the next couple of quarters are going to be tough.

So it’s that time again, when I select a song that describes Cisco’s quarter. It’s a little tradition I started a few years ago when I first started covering Cisco, and it stuck. Every time I talk to Chambers after an earnings report he asks what the song is going to be. It was more fun when Cisco was coming back from a rough patch, but picking music heading into a rough patch also has its merits. Today I turned to the blues and picked Freddie King’s “Going Down.” The video below appears to have been clipped from “Freddie King, Live at the Sugar Bowl,” a film documenting a King date from the late summer of 1972. Enjoy.

]]>http://allthingsd.com/20131113/cisco-warns-that-2014-is-going-to-be-a-tough-year/feed/0Nutanix Teams With RiceHadleyGates on Global Expansion Pushhttp://allthingsd.com/20131107/nutanix-teams-with-ricehadleygates-on-global-expansion-push/
http://allthingsd.com/20131107/nutanix-teams-with-ricehadleygates-on-global-expansion-push/#commentsThu, 07 Nov 2013 16:24:46 +0000http://allthingsd.com/?p=371242Nutanix, a fast-growing enterprise IT company that specializes in infrastructure for the data center, said today that it has started working with RiceHadleyGates, the consulting firm led by former Secretary of State Condoleezza Rice.

The aim is to help the company grow its business in emerging markets in Asia, the Middle East and the Americas, and to help it navigate some of the foreign policy issues that can sometimes trip companies up.

Nutanix CEO Dheeraj Pandey (pictured above) told me that while Nutanix has already had a “tremendous start” in the U.S. and Canada, it’s now trying to grow business in markets where larger companies already have a big presence. The idea for collaborating with RHG happened at a Khosla Ventures event (the VC firm is an investor) where Rice spoke about nation-building. The idea came to him that it might be a good idea to “start acting bigger than we are” in going after those international markets. But he also wanted some expertise to help Nutanix navigate the complicated geopolitical and economic issues that tend to crop up with these companies.

That led to some conversations with Anja Manuel, a principal at RHG and a former State Department official herself. “We take on very few clients. Some of them are really big companies, but we’re increasingly starting to work with some of the fastest-growing companies in Silicon Valley because they’re innovative and changing the world. They often grow globally without meaning to do so,” she said. “And, while they don’t have the regulatory issues that we usually consult on yet, they are doing a lot of business overseas and they wanted to be strategic about how they grow that business.”

One big issue, Pandey said, is export controls. “We sell to a lot of large companies with significant international presence. We’re a very channel-based company. We sell through a lot of partners who are outside the company so we have to be careful about where and who we ship to. So we have to work with people who understand international business well.”

Nutanix is shipping to customers in 30 countries, and international sales grew 260 percent over the last year.

The company specializes in a combined server and storage system that eliminates the need for a storage array, the point being to run data-center applications more flexibly.

In addition to Khosla Ventures, its investors are Lightspeed Venture Partners, Goldman Sachs, Battery Ventures, Blumberg Capital and Goldman Sachs. It has raised about $71 million in three rounds. Its customers include PriceWaterhouseCoopers, McKesson and eBay.

In addition to Rice and Manuel, RHG’s other founding principals are former National Security Advisor Stephen Hadley and former Secretary of Defense Robert Gates.

]]>http://allthingsd.com/20131107/nutanix-teams-with-ricehadleygates-on-global-expansion-push/feed/0NSA Hacked Links Between Google and Yahoo Data Centers, Says Latest Snowden Revelationhttp://allthingsd.com/20131030/nsa-hacked-links-between-google-and-yahoo-data-centers-says-latest-snowden-revelation/
http://allthingsd.com/20131030/nsa-hacked-links-between-google-and-yahoo-data-centers-says-latest-snowden-revelation/#commentsWed, 30 Oct 2013 17:37:42 +0000http://allthingsd.com/?p=369339It’s well-established at this point that the U.S. National Security Agency obtains data about people from their Internet service providers through its secret court systems. But the NSA also has a backdoor to Google and Yahoo data centers, according to the Washington Post, which has fresh documents from whistleblower Edward Snowden.

The report details a project called MUSCULAR that grabs data from fiber-optic cables. That would be illegal on U.S. soil, but it takes place overseas. Google has said it is actively working to encrypt data flowing between its data centers, while Yahoo has not.

It’s unclear how useful MUSCULAR has been, but the Post reports that it “has produced important intelligence leads against hostile foreign governments.”

Google sounds freaked out in its statement to the Post. The company is “troubled by allegations of the government intercepting traffic between our data centers, and we are not aware of this activity. … We have long been concerned about the possibility of this kind of snooping, which is why we continue to extend encryption across more and more Google services and links.”

Yahoo’s statement is more circumspect: “We have strict controls in place to protect the security of our data centers, and we have not given access to our data centers to the NSA or to any other government agency.”

]]>http://allthingsd.com/20131030/nsa-hacked-links-between-google-and-yahoo-data-centers-says-latest-snowden-revelation/feed/0Cisco Checks on the Cloud and Confirms That It's Getting Biggerhttp://allthingsd.com/20131015/cisco-checks-on-the-cloud-and-confirms-its-getting-bigger/
http://allthingsd.com/20131015/cisco-checks-on-the-cloud-and-confirms-its-getting-bigger/#commentsTue, 15 Oct 2013 15:29:37 +0000http://allthingsd.com/?p=365602Ever heard of a zettabyte? I’m going to use that word a few times in this story, so it will probably help if I define it first.

You know its smaller siblings, the gigabyte, the terabyte, and maybe petabyte and exabyte. Your average PC hard drive is usually a terabyte or two, and external hard drives are now hitting six terabytes. Big companies with data centers routinely deal with data at the petabyte level. Earlier this year, Facebook said it was setting up an exabyte-scale cold-storage facility at its data center in Prineville, Ore., intended to hold photos of its members forever.

But a zettabyte is second-to-last of the words we have to quantify data storage. If you think of a terabyte as 1,000 gigabytes, then a zettabyte is a trillion gigabytes. Beyond that is one more word, yottabyte, which would be a quadrillion gigabytes. After that, there are no more words that have yet been agreed upon.

So, here’s why I’m getting into all this: Cisco Systems today put out another one of its big trend surveys meant to blow your mind a bit and start you thinking long-term about the demands being put on your network and data center. It’s called the Global Cloud Index, which it says measures the combination of three types of data in motion: Traffic between real people and data centers, surfing video and websites, and the like; traffic between data centers, using shared resources; and traffic within a data center. (Cisco explains its definition and methodology in agonizing detail here.)

The headline is that Cisco says that all this traffic will grow by 4.5 times to 7.7 zettabytes a year by 2017. Then it goes on to try and make that amount of data real: It’s enough data to play a continuous stream of music for a year and half, or stream 2.5 hours a day of high-definition video for every person on earth.

It’s worth noting that this isn’t Cisco’s only ongoing exercise to quantify how much data is flowing through the Internet’s pipes. Its Visual Networking Index tracks the growth in another kind of data, and isn’t quite as big.

The biggest portion of the Cloud Index’s traffic, about 76 percent, takes place inside data centers, while about 17 percent is generated between people like you and me, using Web and cloud services. The remaining seven percent of traffic is between data centers.

To reach this estimate, Cisco says it generated some statistical models based on an analysis of what it describes as “various primary and secondary sources,” including a sample of about 40 terabytes of traffic taken from data centers around the world, gathered in 90 million network tests. So there’s clearly some extrapolation involved.

Next, Cisco breaks it down by regions of the world, and determines that the fastest growth in all this traffic will take place in the Middle East and Africa, probably because it’s growing off the lowest base. The biggest share of the traffic will be in North America, naturally (1.886 zettabytes annually by 2017) followed by Asia (1.876 zettabytes) and Western Europe (770 exabytes).

Also, next year is a key one in the evolution of cloud services: Cisco says that, in 2014, 51 percent of data-center workloads will be processed in the cloud. (Again, refer back to this for details on that definition.) That would be an increase from 39 percent in 2012, and will grow to 63 percent by 2017.

There’s more on a site that Cisco has built to explain all this in more detail than most people would care to get into. But, then again, you may not be most people, so have at it.

]]>http://allthingsd.com/20131015/cisco-checks-on-the-cloud-and-confirms-its-getting-bigger/feed/0Fusion-io Rises on Speculation It Might Be the Next Flash Company to Sell Outhttp://allthingsd.com/20130911/fusion-io-rises-on-speculation-it-might-be-the-next-flash-company-to-sell-out/
http://allthingsd.com/20130911/fusion-io-rises-on-speculation-it-might-be-the-next-flash-company-to-sell-out/#commentsWed, 11 Sep 2013 16:49:06 +0000http://allthingsd.com/?p=357598Shares of Fusion-io are rising like crazy today in the wake of a pair of acquisitions of two competitors, and speculation by an analyst that it could be next.

Fusion shares rose by more than $2, or more than 15 percent, to $15.31 a share, after Pacific Crest Securities analyst Brent Bracelin published a slide deck arguing that the company could sell for between $22 and $27 a share in a takeover by another company.

Fusion’s flash technology accelerates enterprise computing gear by speeding the process by which data is fed from the storage to the microprocessor, shortening a costly computing bottleneck. It has landed several high-profile customers, including investment bank Credit Suisse, as well as Facebook and Apple, both of which use its technology in their data centers.

In a presentation to clients, Bracelin argued that Whiptail and Virident sold for valuations of about 10 times sales. After accounting for the value of its technology and the relative scarcity of companies that do what Fusion does, it could sell for a higher premium than either Virident or Whiptail, he wrote.

A buyout price of $22 to $27 a share works out to a buyout price between $2 billion and $2.7 billion. Bracelin didn’t speculate about who a potential buyer might be.

]]>http://allthingsd.com/20130911/fusion-io-rises-on-speculation-it-might-be-the-next-flash-company-to-sell-out/feed/0Cisco Catches Flash Madness With Whiptail Acquisitionhttp://allthingsd.com/20130910/cisco-catches-flash-madness-with-whiptail-acquisition/
http://allthingsd.com/20130910/cisco-catches-flash-madness-with-whiptail-acquisition/#commentsTue, 10 Sep 2013 15:21:08 +0000http://allthingsd.com/?p=357246Cisco Systems just announced that it will pay $415 million for Whiptail, a maker of solid-state virtual-memory systems.

It makes the second acquisition in as many days of a company using flash-memory chips to enhance servers and other systems used in data centers. Yesterday, hard-drive maker Western Digital said it would pay $685 million to acquire Virident Systems.

Whiptail uses flash to boost the performance of computing systems in a manner similar to that of Fusion-io, the Utah-based company that supplies companies like Facebook and Apple with flash devices to boost the performance of their servers.

The deal is being seen as a blow to Fusion-io, and its shares have fallen by more than three percent this morning. Fusion has been seen as a likely target for acquisition since a management shake-up earlier this year.

Cisco will use Whiptail’s capabilities to enhance its Unified Computing Systems, a rack that combines servers, storage and networking, and which is sold into the data centers of large companies.

Cisco’s deal marks an exit for Whiptail investors, which included SanDisk, Ignition Partners, RRE Ventures and Spring Mountain Capital. Its last round was a $31 million Series C led by SanDisk, and a company that at the time was described only as an “unnamed Silicon Valley Titan.”

]]>http://allthingsd.com/20130910/cisco-catches-flash-madness-with-whiptail-acquisition/feed/0Seven Questions for Facebook Infrastructure Guru Frank Frankovskyhttp://allthingsd.com/20130909/seven-questions-for-facebook-infrastructure-guru-frank-frankovsky/
http://allthingsd.com/20130909/seven-questions-for-facebook-infrastructure-guru-frank-frankovsky/#commentsMon, 09 Sep 2013 11:00:31 +0000http://allthingsd.com/?p=356815It doesn’t take long to get impressed when talking to Frank Frankovsky — that is, if you’re the type of person to get impressed by large-scale computing infrastructure problems. As vice president for hardware design and supply chain operations at Facebook, big computing problems are precisely what is in his daily wheelhouse.

I had the chance to be impressed myself when I met one on one with Frankovsky at Facebook headquarters in Menlo Park, Calif. We talked some about Facebook’s helming of the Open Computing Project, through which Facebook shares its tricks for building and configuring the hardware it uses inside its data centers, and also about the unique nature of the infrastructure problems faced by a site as large as Facebook.

AllThingsD: I know two things about your data centers: That you build the machines inside them yourself, and that you keep expanding the number of data centers you have. Aside from those, what are the big important things happening in your data centers?

Frankovsky: The original reason that we started building our own systems was about efficiency, which leads to positive environmental impact. And that is when we created the Open Compute Project. We aren’t the first ones to do it, but we’re the first ones to share what we know, and a lot of others are starting to share what they know and contribute to the project as well as consume from the project. A new theme in the data center is around networking, and another is around cold storage and archiving. Those are the two things that we think are currently sort of underserved in large-scale computing environments.

In sharing the information about how you do things, isn’t there potentially a loss of competitive advantage?

We don’t think so. We think the service that we provide for people to communicate and share what they care about is the thing that differentiates Facebook from others. Essentially sharing the infrastructure designs, we view as a positive. The way I think about it, there is no one technology company that can hire all the best engineers. But when you open source, you sort of can, because you can harness the expertise of so many more engineers. … People are willing to share how they have reduced costs and environmental impact.

So, what does that community look like? Is it like people from Google, or is it someone working out of their garage?

That’s what’s so cool about it, is the diversity of the community. We have some of the biggest technology companies in the world, like Intel and AMD and Dell and ARM and Hewlett-Packard, who are all contributing members. But then we have hobbyists who come to our hackathons and are simply doing cool things.

When I think of the potential scale of computing infrastructure that you’re dealing with, it must simply be enormous. Can you give me some sense of how big your overall footprint actually is?

I don’t have the daily growth numbers. We don’t talk about the total footprint size, but it numbers in the tens of thousands of servers. I can tell you that we add multiple petabytes of capacity every day.

That’s pretty astonishing. So, given that scale, can you tell me what your biggest challenge is right now?

It is pretty astonishing. And that’s why when I talk about the trends we’re seeing right now, one of the storage challenges we have is that a lot of that storage that we add every day is so-called “hot storage,” meaning that it’s storing data that’s frequently accessed for a short amount of time. And then it becomes warm and it becomes cold. The real challenge is to provide effective cold storage. It used to be that people would use tape to archive items. But if you’re scrolling back in your timeline and want to see a photo from a few years ago, you’re not going to wait for someone to go retrieve a tape. So, one of the challenges we shared with the community was around a new way to think about cold storage. You still have to maintain good retrieval speed. You can’t lose the data. But what can you do? There’s a lot of ideas being generated about it. Some are around using low-write-endurance NAND flash memory chips.

Right now, my timeline goes back to just about 2007, when I first joined Facebook, but you still have to serve up pictures that I uploaded then as if they were still new. That’s only six years ago, but you must be thinking in a much longer time frame than that. How then, do you think about it?

We have to store it forever, and make it accessible forever. When you really start to think long-term, that means moving away from mechanical devices like hard drives that spin seems logical. Years from now, they may not still spin. So that makes solid-state storage seem like a logical way to increase in endurance. These are the most precious memories from people’s lives, so the preservation of that data is something we consider a very high priority.

What is the thing that you think about most on a day-to-day basis?

It’s really making sure that we have sufficient capacity to serve our end users. We can’t afford to miss a beat. The new services that we bring online are numerous, the whole design and supply-chain team takes great pride in making sure that the bus never gets a flat. That’s really what we think about. It’s what I jokingly call “feeding the beast.” We have to predict where our end users are going, and what their experience is like if we add more capacity in this or that region. How do we add that capacity in an efficient way, and how do we manage the supply chain so that we don’t have a hiccup. And it’s also about doing it in the most efficient way, not only in a capital expenditure manner, but from the perspective of an ongoing cost. We’ve done a really good job, I think, of making it reliable and efficient.

It occurs to me that we haven’t talked about a Facebook service outage in quite a long time. The only exception I can think of in recent memory was the day that an Amazon Web Services data center went down and took part of Instagram down with it.

When and if we have issues, it’s all hands on deck, because we have more than a billion people who depend on Facebook.

AllThingsD’s Mike Isaac also participated in this interview, and a couple of the questions are his.

]]>http://allthingsd.com/20130909/seven-questions-for-facebook-infrastructure-guru-frank-frankovsky/feed/0Intel's Mobile Ambitions to Dominate at Developers Conferencehttp://allthingsd.com/20130905/intels-mobile-ambitions-to-dominate-at-developers-conference/
http://allthingsd.com/20130905/intels-mobile-ambitions-to-dominate-at-developers-conference/#commentsThu, 05 Sep 2013 15:33:40 +0000http://allthingsd.com/?p=356198Chip giant Intel is holding its annual developers conference in San Francisco next week. The event will feature the first big keynote speeches by its new CEO, Brian Krzanich, and president, Renée James. They will likely contain the first big hints of any shifts in direction or emphasis.

Intel has spent this week quietly setting the table in advance of IDF. Yesterday saw a big release of a new generation of Atom chips aimed at servers used in data centers. The new chip, the Atom C2000, comes in 13 flavors and is being aimed at micro-servers like HP’s Project Moonshot. It’s a step toward the redesigned server racks that Intel and some of its partners envisioned earlier this year.

Analysts were torn over whether or not they like it. Doug Freedman of RBC called it a “compelling offering,” while Hans Mosesmann of Raymond James suggested it was a desperation move intended to defend Intel’s position in the data center from new server chips based on designs from British chip-design firm ARM.

Shareholders seemed to like it. Intel shares rose by more than one percent to close yesterday at $22.64 a share, and the shares are up about 10 percent since the start of the year. Today, Intel shares are giving back some of that gain, and as of 11:30 am ET, had fallen by about 14 cents.

Smith was reiterating a marketing message that Intel teed up earlier this month. Backed by a study from research firm IDC, Intel argued that there has never been a better time to buy a PC, and that consumers are getting ready to start doing just that — if for no other reason than that their current machines are getting so old that they’re too frustrating to use, and that as good as they are, tablets just don’t to everything a PC does.

But the emphasis is likely to be on Intel’s biggest weakness, which is mobile. At the moment, Intel is nearly nowhere in the smartphone business. Mike Bell, the company’s vice president and general manager for new devices, readily admitted this at our D: Dive Into Mobile conference in New York earlier this year. The picture in tablets is somewhat better, but that’s not saying much.

So, next week you can expect to see Intel make its latest moves in an effort to peck away at the commanding lead in the mobile market that ARM-based chips have built up. There will be a lot of talk about Bay Trail, the code name for a new generation of mobile chip that is both a more powerful computing engine and better at managing power consumption than before, and which takes advantage of Intel’s best-in-the-world chip-manufacturing prowess. The early buzz suggests that several Intel customers will announce that they are using its chips in new tablets and phones. But the bigger question is whether or not any of them will be devices that anyone wants to buy.

Time was that Intel’s marketing machine — remember Intel Inside? — was a significant component of the fuel that propelled the personal computer industry’s growth. For years, Intel rounded out the Top 5 of the Interbrand list of the top global brands, mainly on the strength of its PC marketing efforts.

Its placement on that list says a lot about where Intel ranks in the overall technology discussion right now. Once an agenda-setter, it’s looking like it has lost a good deal of its old swagger. We’ll see next week if the new generation of leadership has any hope of getting some of it back.

]]>http://allthingsd.com/20130905/intels-mobile-ambitions-to-dominate-at-developers-conference/feed/0IPO-Bound Pure Storage Lands $150 Million Funding Round Led by T. Rowe Pricehttp://allthingsd.com/20130829/ipo-bound-pure-storage-lands-150-million-funding-round-led-by-t-rowe-price/
http://allthingsd.com/20130829/ipo-bound-pure-storage-lands-150-million-funding-round-led-by-t-rowe-price/#commentsThu, 29 Aug 2013 11:06:13 +0000http://allthingsd.com/?p=354544Pure Storage, a company that makes storage arrays based on flash-memory chips, will announce today that it has landed a $150 million Series E round of funding from a group of investment banks and a private equity fund.

The round was led by investment firms T. Rowe Price and Fidelity, and the hedge fund firm Tiger Global Management. Its prior venture capital investors Greylock Partners, Index Ventures, Redpoint Ventures, Samsung Ventures and Sutter Hill Ventures all participated, as well. It’s being described as the biggest round of financing for a data storage company, ever.

Additionally, Frank Slootman, the CEO of ServiceNow, a cloud-based customer service software company, will rejoin the company’s board. He’s also the former CEO of storage company Data Domain and saw it through its IPO process, and will bring that expertise to the board as a “key advisor.”

The round brings Pure’s total capital raised to $245 million. I couldn’t get a precise number on the implied valuation, but it is above $1 billion and below $2 billion. Pure has been rumored to be carrying a valuation north of $1 billion for some time, so I’d estimate the number to be at the upper end of that range.

Pure’s last funding was a strategic investment round that came from In-Q-Tel, the venture capital arm of the U.S. Central Intelligence Agency. The amount was undisclosed. Before that, it landed a $95 million Series D led by Index Ventures.

The announcement comes in the wake of the IPO filing on Tuesday of Violin Memory. Since both companies make flash-based storage arrays, and are both young companies, they are widely thought of as competitors.

I asked CEO Scott Deitzen (pictured) about that. “About 80 percent of the time, when we go after deals, we don’t usually see them competing against us,” he told me. “But we do see NetApp and EMC,” the two most established players in enterprise storage.

If the investment rounds looks familiar, it is because Pure is deliberately following the path mapped out by Workday, the cloud-based human-resources software company that went public last year.

Dietzen and Pure’s president Dave Hatfield told me that the company is on track to deliver storage arrays that can deliver the speed and power efficiency that comes with flash memory, but which are priced about the same as disk-based arrays.

The trick, they say, is cutting back on the amount of data that you have to store, using de-duplication and compression techniques.

So far, the approach has worked. Pure has landed numerous customers at investment banks, telecommunications companies, pharmaceutical companies, software makers and in the intelligence community.

It’s also growing quite a bit globally. Sales in Europe and Asia are growing “twice as fast as we expected,” Dietzen told me, and the company added sales operations in 10 countries in seven months.

But there’s one way in which it differs from other flash-based companies like Fusion-io and Violin. Pure sells almost exclusively through resellers. That prevents it from one of the main problems that flash companies have tended to suffer from: A high concentration of revenue from a small number of large customers.

For example, Fusion-io’s fortunes have tended to rise and fall over whether or not its biggest customers, namely Facebook and Apple, are building out data centers. And when HP stopped reselling Violin’s arrays as part of its storage portfolio, a big chunk of business that at one time represented as much as 65 percent of revenue went with it. Dietzen told me that no one customer accounts for more than one percent of sales.

The funding will help pay for an expansion of operations. The plan calls for boosting the number of resellers, now numbering in the hundreds, to north of 1,000. A few early customers bought directly from Pure, but Hatfield told me that the plan is to become a 100-percent channel-driven business as soon as possible. The sales pipeline is growing by about 42 percent a quarter, and bookings, an indicator of anticipated revenue, are growing at a clip of more than 50 percent a quarter.

]]>http://allthingsd.com/20130829/ipo-bound-pure-storage-lands-150-million-funding-round-led-by-t-rowe-price/feed/0Intel Details New Visions for the Data Centerhttp://allthingsd.com/20130722/intel-details-new-visions-for-the-data-center/
http://allthingsd.com/20130722/intel-details-new-visions-for-the-data-center/#commentsMon, 22 Jul 2013 20:40:14 +0000http://allthingsd.com/?p=344895Intel made its case Monday for a fundamental rethinking of computer rooms and the hardware inside them. Not surprisingly, the company thinks it has just the right chips to bring about the changes.

Those chips, as Intel was quick to add at an event in San Francisco, might be quite different from those it sells today for server systems and other hardware–and increasingly, may be customized for individual companies operating big data centers.

Financial terms aren’t being disclosed, but the deal is valued at north of $200 million by 21c, an Israeli business publication. The deal marks an exit for Greylock Partners and Norwest Venture Partners, who had invested about $12 million.

The deal is EMC’s second purchase of an Israel-based flash player. Last year, it nabbed XtremIO, a maker of storage arrays, for $430 million.

In a note to clients today, analyst Brian Marshall said ScaleIO’s customers include SAP and a unit of investment giant Fidelity. “In our view, EMC has proven itself as one of the most astute at acquiring ‘best-of-breed’ technology and leveraging EMC’s channel and scale to create revenue synergies,” he wrote.

]]>http://allthingsd.com/20130711/emc-boosts-its-flash-cred-with-scaleio-buy/feed/0Rackspace Builds a New Cloud for CERN, A.K.A. the Place That Invented the Webhttp://allthingsd.com/20130701/rackspace-builds-a-new-cloud-for-cern-aka-the-place-that-invented-the-web/
http://allthingsd.com/20130701/rackspace-builds-a-new-cloud-for-cern-aka-the-place-that-invented-the-web/#commentsMon, 01 Jul 2013 13:04:49 +0000http://allthingsd.com/?p=338192There’s some interesting news on the cloud computing front today, interesting mainly because of one entity involved: CERN, the European Laboratory for Particle Physics. That’s the place that 20 years ago created what we now call the Web.

CERN (its headquarters are pictured) has tapped Texas-based Rackspace to help it build a hybrid cloud computing system. Hybrid cloud is a term of art meaning that the hardware comprising the cloud lives in two places. The hardware that is on the customer’s premises works in concert with the hardware the service provider maintains. That means that computing capacity can be brought to bear on big workloads as needed.

CERN is the place where physicists study nothing less than the very secrets of the origins of the universe, which they do in many ways, including but not limited to smashing particles together at high speed to see what emerges. All these experiments produce a huge amount of digital data — about 25 petabytes a year — that must be analyzed.

It’s not the first time that Rackspace has worked with CERN. Previously, the company helped the lab with a system that allowed certain computing workloads to “burst” into the Rackspace public cloud as needed. This time around, they’re going to collaborate around the idea of tying up Rackspace’s public and private cloud services with other Openstack-based cloud systems that CERN already operates in its own data centers, the point being to get them working pretty seamlessly, and making the whole thing easier and less expensive to manage.

The two organizations made a short video explaining it all, including lots of shots of the Large Hadron Collider which I’ve embedded below.

It’s a lot bigger than most people expected, too. Essentially, Salesforce will standardize its services on a lot of Oracle software and hardware, and resell a lot of Oracle cloud applications alongside its own.

Salesforce will run on Oracle’s version of Linux, and its cloud applications will be running on ExaData-branded hardware. The ExaData buy in particular should be a shot in the arm for Oracle’s hardware business, which it has been building up since its 2010 acquisition of Sun Microsystems. Last week, on a conference call with analysts, Oracle CFO Safra Catz predicted that the hardware division would start growing after numerous quarters of revenue declines, as soon as this quarter. Now we can see what she meant by that. As the biggest provider of software-as-a-service, Salesforce is giving Oracle’s Exa line of hardware a pretty ringing endorsement that other companies may want to follow. And as Om Malik noted today, it’s a loss for Dell, whose hardware Salesforce had used previously.

Salesforce is certainly growing. It’s on the way to its first $4 billion year. And last year it landed Hewlett-Packard as its biggest customer, second only to the government of Japan. It has also been adding to its portfolio by buying SAAS companies with other specialties, most recently ExactTarget, for which it paid $2.5 billion.

What does Salesforce get? Oracle will integrate Salesforce.com’s key customer relationship management product with its human resources and financial software. Salesforce will not only standardize on the Oracle products internally, but will resell them alongside Salesforce’s main CRM product. But Oracle is still a big player in CRM software on its own, so here Oracle and Salesforce will still compete.

Clearly this is a blow to Workday, which has been known to go in on deals with Salesforce, but probably not a serious one. Workday shares barely moved on the news, but we’ll see if it has an effect over the longer term. Ellison and Oracle president Mark Hurd have been trashing Workday nearly every chance that get near an open microphone. It’s also a key move on the board against SAP, which also sells HR software, and in 2011 spent $3.4 billion to acquire SuccessFactors.

The alliance also appears to mark an end to the peculiar feud between Ellison and Salesforce CEO Marc Benioff. It had simmered quietly for a few years, and then burst into open flame two years ago, when Ellison ordered Benioff off the stage where he was about to speak at an Oracle conference in San Francisco.

After Microsoft yesterday, this marks the onset of two major instances of detente, both for Oracle and for Ellison himself. Benioff is, of course, a former Oracle executive who learned a lot of what he knows at Ellison’s side. One wonders what other feuds Ellison may be in a mood to sort out.

]]>http://allthingsd.com/20130625/oracles-ellison-and-salesforces-benioff-are-friends-again-after-broad-cloud-alliance/feed/0Cumulus Networks Comes Out of Stealth With Linux for Data-Center Networkshttp://allthingsd.com/20130619/cumulus-networks-comes-out-of-stealth-with-linux-for-data-center-networks/
http://allthingsd.com/20130619/cumulus-networks-comes-out-of-stealth-with-linux-for-data-center-networks/#commentsWed, 19 Jun 2013 13:38:44 +0000http://allthingsd.com/?p=334692Startup Cumulus Networks popped out of stealth mode today to announce that it has created a version of the Linux operating system for building out software-defined networks in the data center.

Backed by a Series A investment led by Andreessen Horowitz’s Peter Levine, the company aims to break up the proprietary software that tends to run on networking gear like switches. While there has been so much talk about software-defined networking, the fact is that the primary piece of networking equipment still has an embedded operating system on it that is closely tied to the company that built it.

As Levine put it in a blog post this morning, Cumulus Linux is intended to change that. Combine it with other SDN technologies like that of Nicira — a onetime AH-backed startup that’s now part of VMware — and you have a reasonable shot of making proprietary hardware obsolete.

In this way, networks become a lot more customizable, and more carefully tuned to the applications running in them. They also get cheaper. As Brian Marshall, an analyst with ISI, noted in a research note to clients this morning, shortly after Cumulus’ announcement crossed the wires: “In our view, Cumulus is the first company to offer a true standalone operating system for the datacenter switch market decoupled from the underlying hardware infrastructure. End customers now have the choice of purchasing commodity white-box (or bare-metal) switching hardware from Taiwanese vendors like Quanta, Accton and Agema.”

The target, of course, is Cisco Systems, which controls most of the switching market, followed by companies like Hewlett-Packard, Alcatel-Lucent, Juniper and Dell.

Cumulus, which has raised a combined $15 million from AH, Battery Ventures, Peter Wagner and the founders of VMware, is led by a team of networking veterans. CEO JR Rivers built switches at Google, and had two stints at Cisco, his second by way of Cisco’s acquisition of Nuova Systems in 2008. CTO Nolan Leake was also at Nuova, and spent some time at VMware.

Marshall says he thinks a key Cumulus customer is Amazon Web Services, which he says may be using Cumulus technology in trials. Web hosting company Dreamhost is also a customer. Two partners are VMware and Broadcom.

]]>http://allthingsd.com/20130619/cumulus-networks-comes-out-of-stealth-with-linux-for-data-center-networks/feed/0Modern Data Centers Fuel NSA’s Verizon Phone Spyinghttp://allthingsd.com/20130606/modern-data-centers-fuel-nsas-verizon-phone-spying/
http://allthingsd.com/20130606/modern-data-centers-fuel-nsas-verizon-phone-spying/#commentsThu, 06 Jun 2013 22:40:06 +0000http://allthingsd.com/?p=329891Technical question: How much computing power does it take to store and analyze data on every call in the U.S.?

Answer: A lot.

The National Security Agency maintains several data center facilities around the U.S. and is about to build another — a $1.2 billion facility in Utah that will be called Bumblehive and open this fall, where, according to one expert, it will analyze voice traffic from Verizon’s telephone network.

]]>http://allthingsd.com/20130606/modern-data-centers-fuel-nsas-verizon-phone-spying/feed/0Box On Track to Book More Than $100 Million in Sales This Year, CEO Levie Sayshttp://allthingsd.com/20130529/box-on-track-to-book-more-than-100-million-in-sales-this-year-ceo-levie-says/
http://allthingsd.com/20130529/box-on-track-to-book-more-than-100-million-in-sales-this-year-ceo-levie-says/#commentsWed, 29 May 2013 21:13:19 +0000http://allthingsd.com/?p=326703Box CEO Aaron Levie was in a chatty mood over lunch following his appearance at D: All Things Digital with Cisco Systems CEO John Chambers earlier today.

With Box quickly turning into one of the most anticipated IPOs expected next year, there are a lot of questions about the enterprise cloud company’s financial picture. So I caught him on the buffet line and peppered him with a few questions.

Levie told me that Box is on track to book more than $100 million in revenue this year. And it’s not hurting for cash. Box still has most — but not all — of the $150 million it raised in a series E round of funding earlier this year still in the bank. That round was led by private equity firm General Atlantic and was first announced at $125 million last summer, but grew to $150 million by January.

I’d heard recently from an industry source that Box is burning through cash at a rate of about $8 million per month. Levie wouldn’t confirm a specific number, but said Box’s burn rate is easily “seven figures per month” and tends to rise and fall depending on what’s going on at the company month to month.

What’s Box’s biggest expense? Surprisingly, not infrastructure and IT gear, despite the fact that it has been in the past: Now it’s sales and marketing. “I need to hire sales teams that can get enterprise deals done,” Levie said. The company has recently been hiring aggressively and expanding into Europe. It also opened a sales office in London recently, taking advantage of declining IT budgets at companies on that continent by offering them cost-saving storage and collaboration services in the cloud.

I had wondered during his time onstage with Chambers whether Box buys gear from Cisco. It does: Routers and switches mostly, but not Cisco’s Unified Computing System that combines servers with storage and networking. At least not yet, Levie told me. Most of Box’s servers come from Dell, he said. “They’ve perfected the way of ordering 100 servers at a time,” he said. When asked whether he buys servers from Hewlett-Packard — which, like Box, is based in Palo Alto, Calif. — he said only, “No comment.”

Who knows what that means? But one thing is certain: Box was at least part of the reason that Dell grew its unit sales of servers by more than 2 percent in the first quarter of the year, according to the latest look at server sales by the market research firm Gartner, whose findings were published today. Confirming preliminary numbers that Dell himself was bragging about publicly weeks ago, HP’s unit sales fell by more than 15 percent. Its share of the market, which still leads the world, stood at 24.9 percent while Dell’s rose to 22.9 percent.

]]>http://allthingsd.com/20130529/box-on-track-to-book-more-than-100-million-in-sales-this-year-ceo-levie-says/feed/0Chambers and Levie Both Want to Shake Up Enterprise IThttp://allthingsd.com/20130529/next-up-live-cisco-ceo-john-chambers-and-box-ceo-aaron-levie-at-d11/
http://allthingsd.com/20130529/next-up-live-cisco-ceo-john-chambers-and-box-ceo-aaron-levie-at-d11/#commentsWed, 29 May 2013 18:17:00 +0000http://allthingsd.com/?p=326332Pairing Aaron Levie, the young gregarious CEO of the up-and-coming enterprise cloud platform company Box, with John Chambers of Cisco Systems, one of the tech industry’s best known and longest-serving CEOs, might not seem an obvious choice.

But spend a little time with either one of them and you quickly realize that while outwardly different — Levie is known to favor sneakers and perform magic tricks at parties while Chambers wears impeccable suits and loves to talk politics — they’re remarkably alike.

Cisco is the lumbering $46 billion (2012 sales) networking giant that is trying to parlay its world-beating expertise in selling equipment that runs the world’s networks into becoming the world’s leading vendor of enterprise IT and a significant supplier to companies embracing cloud computing. He’s also a veteran D: All Things Digital speaker.

Box, meanwhile, is all about the cloud. It’s the enterprise-oriented file-sharing and collaboration service that has raised more than $300 million in venture capital funding and is well on its way to being one of the most anticipated initial public offerings of 2014. Today marks Levie’s first time on the D: All Things Digital stage.

Levie: Referring to the previous session on Glow, there’s a “natural partnership” for Bang With Friends.

Walt: Everyone knows Cisco and has known it for decades. You’ve been powering a lot of computing and Internet for a long time. General question: Corporate IT was one of the most regressive forces in technology. Those who came up with great ideas would run into a wall of excuses. That seems to have been changing in the last few years. The power and instinct to say no to something new and interesting has dropped away. Is that a real thing and how is it changing your businesses?

Levie: The first 20 years, the complexity of building software and systems and implementing it meant you needed to have a lot of internal expertise. There was less democratization and innovation. The cloud and mobile have inverted that in the last three to five years. When people bring their own devices into the workplace, they need to bring their own software into the workplace. CIOs are getting the idea that they can either let it happen or get on the front end of it and improve productivity.

Chambers: What you’re seeing is a faster pace of innovation than I’ve ever seen. Speed all of a sudden is the key ingredient. How do you make big data useful? CEOs are saying they’re also technology companies. Seeing speed in terms of competition can be the differentiation.

Walt: There was a time when enterprise companies led the way. Is that still the case?

Chambers: It used to be consumer driven. If I were betting, I’d say it’s going to flip in the next few years.

Levie: The expectation in the consumer Web is that you can share anything, any time, but that hasn’t yet happened in the enterprise.

Levie: You’ll have all news types of use cases.

Chambers: If you think of the Internet in four generations, the fourth will be Internet of Things. It’s going to be driven by businesses because businesses have to connect all the devices.

11:31 am: Walt: It seems a lot of people who work under the thumb of corporate IT, they still have to have a parallel set of devices. Some of the systems they use at the office are old and haven’t been upgraded. Or an old work laptop versus their personal one.

Levie: There’s some pent-up demand that will unravel. When we used to meet with CIOs they’d be running Windows machines. Now we see them with MacBook Airs and iPhones.

Levie: The three biggest deals we sold last year were to companies created in the 1800s.

Chambers: If businesses leaders can’t get what they want from their own IT shops, they will get it from someone else. I don’t know a CIO today that thinks they can limit the device you can bring to work. BYOD trumps security, even in the Department of Defense.

Walt: Isn’t this an enormous culture shift? Those products are made by companies that weren’t designed for use in the enterprise, and don’t even have an enterprise sales force. (Apple doesn’t.)

Chambers: Creative destruction is speeding up, and the top five or six IT players are going to change in the next few years.

Levie: We’ll go meet customers, and their primary relationship with companies like Oracle (which he selected randomly) is getting audited to make sure they’re paying enough money for the software they use.

Walt: John, you’re the established guy, and Aaron is the challenger guy. Is that right?

Chambers: We see the market in much the same way. If you watch where CEOs are watching the industry, they’re looking for speed. He sees $14 trillion in profits emerging from Internet of Things. Chambers said Cisco and Box are working on partnering.

11:41 am: Chambers said Cisco was too early with the Flip Camera. It would have been better had the service moved to the cloud.

Walt: Can you focus on both the enterprise and consumers?

Levie: To sell to the enterprise, you have to have good consumer-grade instincts. Today that is the standard by which every enterprise software company is going to be judged. It has to be on par with consumer grade technology.

Walt: So why not sell Box service to consumers?

Levie: It conflicts with our ability to roll out to 50,000 employees at large companies. We’re going to put all our wood behind that arrow.

Chambers: Cisco doesn’t enter markets where it can’t get 40 percent market share or be a leader.

Walt: But you did try consumer.

Chambers: We try different things. We have two out of three acquisitions work out. Today we’re number two in the world in cloud. We have 60 percent market share in mobility. Not all moves work. We compete against market transitions not companies.

Walt: Talk about the ability of the Internet to bear the traffic that is coming.

Chambers: The traffic is going to increase 300 percent in five years. It will move from being PC-like devices. Other devices will be more than 50 percent. We’ll build routers that are able to do huge volumes.

Walt: How much of this traffic will be cellular networks where there is scarcity of capacity? Aren’t we going to hit some kind of wall?

Chambers: The price is going to come down. Architectures are going to change. The network will become the platform.

Levine: As you have a proliferation of Wi-Fi, that creates an opportunity for enterprise technology companies to work in new markets in new ways.

11:49 am: Time for Q&A.

Question: Could you talk more about the reinvention of Cisco for the next era? Talk about services like WebEx.

Chambers: Services by definition will occur. We will base our future on an architectural play. We’ve done 15 acquisitions in the last 14 months. Nearly all of them were software, services and recurring revenue.

Question from Esther Dyson: For Chambers. You were one of the first valley companies to focus on employee health. What is your experience with this? Have you saved cost?

Chambers: A large part of successful companies is culture. We treat employees as family. When employees have life-threatening illnesses in their families we move heaven and Earth to help them. We think health is going to be one of the fastest growing verticals in the next five years. Big investments in IT are coming.

Dyson: Investments in prevention rather than care after?

Chambers: Completely agree. Prevention is the least expensive form of care.

Chambers: Been answering that question for years. It’s about who gets the market transitions right. We’re going to provide products to companies selling IT as a service. Secondly, it’s about how do you deliver capabilities to your customers. We win wither way.

Levie: While things like Amazon Web Services take out some costs in the near term. Later it drives the need for more IT. If companies like the Ciscos and the Dells of the world can figure it out.

Question for Aaron from Steward Alsop: I have Box, Dropbox, Google Drive and Apple iCloud. How do you solve all the different services?

Levie: We thought it should be easy to store and share, we thought there would be similarity among services. Our view is that where the data is stored is less important than how the data is managed.

Question about the Internet of Things.

Chambers: When you have $14 trillion worth of profits, you’re going to see every company moving on it. The combination of server technology and storage with networking will succeed. (He’s describing Cisco’s Unified Computing System.)

]]>http://allthingsd.com/20130529/next-up-live-cisco-ceo-john-chambers-and-box-ceo-aaron-levie-at-d11/feed/0The Future of the Data Centerhttp://allthingsd.com/20130502/the-future-of-the-data-center/
http://allthingsd.com/20130502/the-future-of-the-data-center/#commentsThu, 02 May 2013 15:00:55 +0000http://allthingsd.com/?p=317676We’re in the midst of a revolutionary shift in the enterprise data center that has not been seen in decades. At its core, this shift is being driven by the rise of “soft” infrastructure. Virtual machines and virtual networks and storage can be provisioned and reconfigured rapidly and in a highly automated way, rather than being limited by the constraints of hardware infrastructure that was built for a much less dynamic environment. The “software-defined data center,” as it is commonly known, has business repercussions that go well beyond transforming data center technology. It has shaken long-term alliances between technology giants. Vendors are scrambling to reposition themselves to best exploit this new era of soft IT.

VMware is perhaps the best example of this phenomenon. No longer is the company positioning itself as simply a pioneer of server virtualization, but rather it is now betting its future on the broader software-defined data center. VMware dominates the server-virtualization market (its technology lets a company run hundreds of virtual servers on one physical server). It’s no surprise, then, to see VMware accelerate its R&D schedules and M&A activity to extend its technology portfolio to also seize the infrastructure and storage markets that are up for grabs in the new software-defined data center.

In a major bid to own the leading infrastructure play in the new software-defined data center, VMware last summer acquired software-defined networking pioneer Nicira for $1.26 billion. That is a staggering sum that becomes even more impressive when one considers that, by most estimates, Nicira was generating less than $10M in sales. As part of its strategy to bite off a small piece of the emerging software-defined storage space, VMware also recently acquired Virsto for an undisclosed sum.

The rationale behind these acquisitions comes into clearer focus when you consider the larger opportunity posed by the software-defined data center. As data center workloads increasingly become virtualized, it makes sense that VMware, which already enjoys a market cap of more than $30 billion, look for ways to increase its role in managing the broader data center infrastructure.

So, with all of this in mind, what actually makes up the Software-Defined Data Center — and which companies stand to gain the most in each area?

Components of the Software-Defined Data Center

The concept of the software-defined data center revolves around making the three major infrastructure components of a data center (compute/server, networking and storage) more flexible, more automated and less dependent on the underlying physical hardware. The idea is to create a pool of available resources that can automatically adapt to changing workloads and ensure that the right resources are available whenever and wherever needed. When you look at the compute/server space, virtualization forever changed the way applications are deployed, and the dominant force behind this is VMware. While VMware has established itself as the market leader in server virtualization, offerings from Microsoft, Citrix and Red Hat are beginning to carve out sizable market share, as well. With almost 70 percent of workloads today running on virtualized servers according to IDC, this is certainly the most evolved component of the software-defined data center to date.

Networking

In the wake of the Nicira deal, along with major announcements from Cisco, Juniper and other networking giants, software-defined networking has become perhaps the next focal point of the software-defined data center discussion today. While not as mature as the server/compute side, the software-defined networking market is expected to grow; IDC predictsfrom $360 million in 2013 annual sales to $3.7 billion by 2016.

Cisco, which has long dominated the networking market and has a valuation of over $111 billion, has started to face new competition from startup companies like Nicira and Big Switch Networks, which designed their products for today’s virtualized IT environment. To go after this market, Cisco has invested $100M in a “spin-in” company called Insieme Networks. Cisco clearly views software-defined networking as one of the most significant technologies to emerge in decades.

Storage

The last component of the software-defined data center is storage, which is not coincidentally the trickiest part of the equation. The storage layer has traditionally been the laggard of the data center, and most venture capital firms have feared investing in startup storage companies due to the stronghold on the market enjoyed by technology giants like EMC, NetApp, HP and IBM. This has changed in recent years, however. The rise of virtualization and, more recently, cost-effective flash technology, has spurred a storage renaissance — today, storage is one of the hottest markets for venture investors.

The increased investment sexiness of storage helps explain the success of Fusion-io, which created a new memory tier based on flash technology. The company went public in June 2011, and is valued at more than $1.5 billion. Because of the huge impact of flash technology, some of the big legacy storage vendors have been looking for acquisitions to help modernize their product portfolio. Last summer, EMC acquired XtremIO for $400 million dollars to add flash to its own storage portfolio. However, flash is just one component of software-defined storage.

Flash is a very disruptive technology that has paved the way for dozens of new entrants into the storage market, but flash by itself doesn’t address the complexity and data management issues created in virtual environments. Most major storage vendors created their product architectures before virtualization even existed, meaning they were originally built for a physical world where application workloads were discrete, known and predictable. Indeed, many of the new storage startups have continued using the same architectures, albeit with faster flash storage rather than spinning disks. The problem is that the software-defined data center is possible only with virtualization. And adding new layers of software on top of these legacy architectures is an inefficient way to deal with the problem.

The move to the software-defined data center is the major technology shift of this decade, just as virtualization was in the 2000s and the Internet was in the 1990s. Like those previous shifts, there is a wealth of new opportunities for companies both new and old. It will be interesting to see how everything plays out — and, rest assured, this race has a long way to go.

Dr. Kieran Harty is a co-founder of Tintri Inc. and serves as its chairman and chief executive officer. Harty served as an executive vice president of engineering and R&D at VMware, and has more than 15 years of engineering and management experience with high tech companies. Before VMware, he was vice president of R&D at Visigenic/Borland and chief scientist at TIBCO. Harty has a PhD in electrical engineering from Stanford University and a master’s degree in computer science from Trinity College Dublin.

]]>http://allthingsd.com/20130502/the-future-of-the-data-center/feed/0Why Are Fusion-io Shares Up So Much Today? Flash Madness, Naturally.http://allthingsd.com/20130425/why-are-fusion-io-shares-up-so-much-today-flash-madness-naturally/
http://allthingsd.com/20130425/why-are-fusion-io-shares-up-so-much-today-flash-madness-naturally/#commentsThu, 25 Apr 2013 19:23:14 +0000http://allthingsd.com/?p=315676Shares of the flash memory technology company Fusion-io are up by nearly 20 percent today on a boatload of good news.

As of 3:05 pm ET today, Fusion shares were trading at $19.89, up $3.26 (or 19.6 percent) from a $16.63 closing price Wednesday. For one thing, the company reported quarterly results yesterday, and gave forward guidance for the current quarter that was better than anyone expected.

As CEO David Flynn pointed out in an interview this morning, that can be a blessing and a bit of a curse. Earlier this year, Facebook and Apple trimmed orders and Fusion was forced to trim its outlook. Now, with Facebook building again on a site that’s big enough to accommodate at least two more facilities just like it, there’s a brighter outlook. But if you take out the up-and-down side of Fusion’s business that caters to Apple and Facebook growth, Flynn said, there has been a nice, steady, predictable ramp.

There are also new customers to report: Box, the fast-growing enterprise cloud services company, has started adding Fusion-io products to its servers. So has music service Spotify.

Then there’s the matter of the $119 million acquisition of NexGen, a Louisville-based company that specializes in taking traditional hard-drive-based storage products aimed at mid-range companies and combining them with Fusion-io’s flash-based technology. The combination gives Fusion access to a base of customers it wasn’t previously reaching. “We started out reaching the companies at the top of the pyramid, and the fact is the size of the market opportunity in the middle market is bigger,” Flynn said.

The deal has Fusion paying $114 million in cash and $5 million in stock. It’s Fusion’s second acquisition this year. Last month, it acquired ID7, a British software firm.

As if you needed another indicator about how much the old Wintel world of PCs has flipped in the last couple of years, take a look at the earnings results of the British chip designer ARM, which just reported quarterly earnings this morning.

Sales rose by 29 percent year on year to north of 170 million pounds (or $260 million), which was better than expected. Earnings on a per-share basis were five pence versus the expected four pence, amounting to a beat of a penny per share. Its shares are rising by 9 percent both in the U.K. and on the Nasdaq in the U.S.

ARM, you’ll recall, is the company behind the designs that go into building the chips that land in most smartphones and tablets. Rather than make the chips, ARM licenses its blueprints to companies like Qualcomm, Broadcom and Nvidia, which then make their own chips. And since phones and tablets are growing a lot faster than traditional PCs (come to think of it, PCs actually aren’t growing at all), ARM is looking a lot healthier than traditional chip companies like Intel and Advanced Micro Devices. Here’s a pretty good indicator: Royalty payments for processors rose in the quarter by 33 percent versus a processor industry that’s up about 2 percent.

ARM is quickly turning out to be the company to watch in the chip space. Chips sporting ARM designs are everywhere these days, and there has been a lot of chatter of late about them heading into the data center.

Hewlett-Packard offers ARM processors as an option on its radical new server design, called Project Moonshot. Dell offers ARM-based servers, too, and there are even more plans for ARM chips in servers. I talked with CEO Warren East about this last year. (East is retiring this summer, by the way, and Simon Segars will be ARM’s new CEO, starting in July.)

The basic argument that ARM makes coming in is that its chips are good at managing power consumption, in part because they were designed from the beginning for mobile applications. And power consumption continues to be a huge problem, especially in data centers where thousands of servers are crowded together in one place.

Intel, the king of the chip world, has responded and created its own line of low-power chips called Atom. And as we learned from Mike Bell, head of Intel’s mobile chip business at D: Dive Into Mobile last week, it has gotten off to a slow start but is starting to get a little traction in mobile.

Another version of Atom, announced the week before last, will also defend Intel’s interests in the server space. But keep an eye on this, because there’s eventually going to be a rumble.

]]>http://allthingsd.com/20130423/my-look-at-arms-healthy-sales/feed/0Facebook's Next Data Center Will Be in Iowahttp://allthingsd.com/20130421/facebooks-next-data-center-will-be-in-iowa/
http://allthingsd.com/20130421/facebooks-next-data-center-will-be-in-iowa/#commentsSun, 21 Apr 2013 20:37:58 +0000http://allthingsd.com/?p=314189Social networking giant Facebook is apparently the company behind a mysterious data center construction project under way in the town of Altoona, Iowa, according to a report in the Des Moines Register. It would be Facebook’s fourth company-owned data center. The others are in Prineville, Ore., Forest City, N.C., and Lulea, Sweden.

The Register says the data center will be 1.4 million square feet. There’s no word yet about what incentives, if any — tax breaks and the like — the state of Iowa is expected to provide. And there’s no word on how many jobs the facility will provide. Facebook is also said to want some tax credits for using wind power; that will require a vote by the state legislature.

State officials have been kind of hush-hush about the whole thing, and apparently there was pretty stiff competition between Iowa and Nebraska to win the deal. Google and Microsoft have recently opened data centers in the state, as well.